KUCHING: Latexx Partners Bhd (Latexx Partners) is on aggressive expansion plans for the next few years to meet the increasing demand for rubber gloves.
HUGHER EARNINGS: A small box which contains nitrile disposable gloves. Latexx Partners, which is expected to release its earnings figure by the end of this week will witness the company reported strong earnings supported from higher prodcution capacity and more nitrile sales.
According to CIMB Investment Bank Bhd (CIMB) in a research report, it noted the company planned to bring forward the construction of its seventh plant this year from 2013.
The research firm observed that the company had been expanding its nitrile production capacity that made up about 20 per cent of sales in the fourth quarter of 2009 as compared with 18 per cent in the previous quarter.
It also observed that the company’s nitrile range had expanded to more than 30 per cent of its production as the group was recently awarded new contracts by major multi national companies.
Additionally, the research firm pointed out that the fifth largest rubber glove manufacturer in the country also aimed to be a premium rubber glove player by exploring more opportunities to develop the natural rubber (NR) powder-free and nitrile range gloves.
Meanwhile, CIMB stated that Latexx Partners’ recent tied up with Dutch Company, Budev BV to develop protein-free natural rubber (NR) gloves currently unavailable in the market to provide a further boost to its earnings and margins.
The research firm said the rubber glove manufacturer was presently the only company licensed to produce such gloves.
Financially, CIMB estimated that Latexx Partners could report its fourth quarter net earnings of around RM17 million. The research firm highlighted that the strong figures would be supported by its additional annual production capacity of 800 million pieces of rubber gloves during the quarter and high nitrile products sales.
Therefore, CIMB believed that the fourth quarter earnings results for Latexx Partners were expected to be robust, boosted by higher production capacity and more nitrile sales. The research firm predicted that Latexx full-year net profit was likely to meet its forecast of RM51.9 million.
Thus, the research firm retained its earnings forecasts for Latexx Partners and maintained its positive outlook for the company with a target price of RM5.44 per share.